Expro Group Holdings N.V.

please press star one on your telephone keypad. I'd like to hand over to Chad Stevenson, Director, Investor Relations. Please go ahead.

Welcome to Expro's first quarter 2025 conference call. I'm joined today by Expro's CEO, Mike Jarden, and Expro's CFO, Quinn Fanning. First, Mike and Quinn will have some prepared remarks. Then we will open it up for questions. We have an accompanying presentation on our first quarter results that is posted on the Expro website, expro.com, under the Investors section. In addition, supplemental financial information for the first quarter results is downloadable on the Expro website, likewise, under the Investors section. I'd like to remind everybody that some of today's comments may refer to or contain forward-looking statements. Such remarks are subject to risks and uncertainties that could cause actual results to differ materially from those results expressed or implied by such statements. Such statements speak only as of today's date, and the company assumes no responsibility to update forward-looking statements as of any future date. The company has included in its SEC filings cautionary language identifying important factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings which may be accessed on the SE's website, sec.gov, or our website, again, at expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measure in our first quarter 2025 earnings release, which can also be found on our website. With that, I'd like to turn the call over to Mike.

Good morning. Good afternoon, everyone. I'd like to start off by reviewing the first quarter 2025 financial results as summarized in today's earnings press release. I will then discuss what I would characterize as a dynamic operating environment, which despite our expectation that upstream investment will likely moderate in the near term, we believe supports a positive multi-year outlook for energy services companies like Expro that have a material exposure to the international and offshore markets. Quinn will supplement my commentary on the first quarter and outlook and share some additional financial information. For a recap of consolidated results and quarterly results by region, I'll direct you to slides two through nine of the presentation we've posted to our website, expro.com. On slide two, EXPRO's Q1 2025 revenue was 391 million with an adjusted EBITDA of 76 million or 20% revenue. This marks our highest first quarter performance in adjusted EBITDA and margin since merging with Franks in October 2021, continuing a multi-year trend of margin improvement. Our performance demonstrates robustness of our business model, the benefits of having a comprehensive portfolio of services and solutions, and a global presence, but modest exposure to markets such as U.S. land, Mexico, and offshore Saudi that are expected to contract in 2025. Organic investment and a successful M&A strategy continue to enable margin expansion, improve relevancy to our customers, and better position a company for 2025 and beyond. In sum, we believe Expro is well prepared to handle expected market volatility and create long-term value for stakeholders. In terms of commercial activity, we secured $272 million in new contract awards in the first quarter. Safety, service delivery, and cost-effective technology-enabled services and solutions have all contributed to these successes, which have included contracts across the lifecycle of the well. More specifically, we had contract awards in the U.S. covering well construction services valued at approximately $50 million, in Brazil for drilling and completions, work over and abandonment services valued at more than $30 million, and in Indonesia for electric line and slick line services valued at approximately $15 million. Our backlog at approximately $2.2 billion at the end of the first quarter remains both healthy and in line with expectations given the typical seasonal patterns of contract awards. Turning to the macro outlook, following the conclusion of the first quarter, tariff announcements and a pull forward of production increases by OPEC Plus introduced significant near-term uncertainty and volatility across the global oil markets. Fears of a tariff-induced global trade war have lowered macroeconomic visibility and GDP growth expectations. Consequently, there is no clear near-term path for global liquids demand, which before Liberation Day had been rising. Despite changing trade policies, a modestly oversupplied oil market, and evolving economic conditions, the long-term outlook for the international onshore and offshore markets, to which EXPRA is most levered, remains very positive. Regarding long-term demand, Natural gas will be a critical clean fuel to meet global energy needs with tailwinds stemming from AI, data center, and digital infrastructure related demand and from energy security considerations, particularly in Europe. This is why LNG is in the midst of a major expansion phase. Similarly, liquids demand is expected to remain above 100 million barrels per day throughout at least 2030, and more than half of that daily demand will be met with barrels from fields that have not yet been developed. Regarding long-term supply, as Veritan highlighted in its recent Super Spike newsletter, U.S. shale oil, which has been the overarching engine of oil supply growth over the past decade, is showing signs of maturation, with a growing list of companies contemplating plans for what comes after U.S. oil shale. We believe operators will increasingly focus on offshore activities. This shift is due to the accessibility of deep water barrels, which also offer cost and carbon advantages. After a decade of restrained upstream investment, we remain bullish on the business over the longer term. However, the energy services industry is also navigating global economic uncertainty and supply, demand, and balances, the collective effect of which has been weaker and more volatile commodity prices. Until prices stabilize, customers will likely remain cautious with discretionary spending and new project sanctioning. In our view, current macro conditions are influenced more by global trade issues and geopolitics than the energy industry fundamentals, which remain very strong. Meanwhile, volatility has increased across commodities, equities, and other markets, and we expect this to persist until there's better clarity on the macro outlook. While policy choice may ultimately lead to a global recession, a more likely scenario is that sector weakness will reverse once trade policies are clarified and other macro indicators improve, similar to the recovery scene after the 90-day pause on planned tariffs. In this context, according to the U.S. Energy Information Administration, global oil consumption is forecast to increase by 0.9 million barrels per day in 2025, with demand reaching an average of 103.6 million barrels per day. A further increase of 1.1 million barrels per day is anticipated in 2026. In short, despite softer near-term growth, demand is expected to remain resilient, supporting a long-term upcycle for the energy sector. A potentially protracted trade war between the US and China, however, would pose a risk to China's long-term oil demand. On the supply side, the EIA projects global liquids production to grow by 1.3 million barrels per day in 2025, reaching 104.1 million barrels per day, led by non-OPEC Plus producers, including the United States, Canada, Brazil, and Guyana. Further growth of 1.2 million barrels per day is forecast for 2026. That said, supply risk remains high due to the uncertainty surrounding the sustainability of sanctions on Russia, Iran, and Venezuelan exports. While the EIA currently forecasts average brick prices of $68 per barrel in 2025 and $61 per barrel in 2026, oil prices are expected to remain volatile in the near term as markets digest new tariff policies, geopolitical tensions, and sanctions. Despite downside risk, commodity prices are expected to remain at levels that will support continued upstream investment, with most international and offshore operators maintaining good profitability above that $60 to $65 per barrel range. This should provide a constructive environment for continued activity across EXPRO's largest product lines. If a more constructive macro backdrop develops over the next several quarters, we continue to believe that 2025 will be a transition year with a return to a healthy level of sanctioning activity in 2026 and beyond to meet long-term demand for oil and gas. Offshore project sanctioning continue to gain momentum with about two-thirds of greenfield capex over the next two years expected to be allocated to offshore developments again these projects benefit from lower emissions intensity and have competitive break-evens and are a natural fit for express core strengths compared to our q4 earnings call outlook this indicates a delay in activity yet maintains a positive multi-year perspective both on the overall opportunity set and expo's relative market position Years of industry-wide capital discipline have prepared operators to continue development activities through a more volatile near-term market scenario, and as such, upstream investment is expected through 2025, with several geomarkets likely proving to be more resilient than the equity markets currently seem to believe. In our NLA region, activity should be stable in Brazil and Guyana as a result of the development plans emanating from the high volume of FIDs in recent years, as well as in Argentina and Colombia, because of an abundance of oil and gas resources and pro-growth policies. Similarly, in ESA, the outlook is constructive for Norway and parts of West Africa. In the Middle East and North Africa, we are expecting stability in our two largest markets, which are Saudi and Algeria. In Saudi, our business is more levered to onshore unconventional gas, more so than offshore oil. In Algeria, our business is levered to production optimization, more so than new development activity. In Asia Pacific, we were expecting a 2025 slowdown offshore Australia prior to April 2 due to the timing of projects. But markets such as Brunei and India should have a post-monsoon season rebound in the second quarter of 2025. And we have new activity commencing in both Indonesia and Vietnam. In addition to the anticipated contractions in U.S. land, Mexico and offshore Saudi that I mentioned earlier, A prolonged trade war and weaker commodity prices could result in reduced activity in the Gulf of America, which historically responds relatively quickly to changes in commodity prices and is an important market for expo. Overall, it is expected that customers' 2025 work programs will be largely unaffected by short-term commodity price movements and market uncertainty. However, non-committed expiration appraisal wells and the final investment decision approvals may be delayed as customers reevaluate project economics in light of current conditions. Consequently, the approval of offshore projects in areas such as West Africa may be postponed to 2026 or even early 2027. If expected project approval slides to the right, the 2026 activity outlook may be impacted, but we believe this will also extend the upcycle given the reduced spending levels over the last 10 years. If development activity slows, customers will continue to focus on improving efficiency and reducing the carbon intensity of their operations, resulting in increased brownfield activity and sustained OpEx spending. While Expro is currently more levered to drilling and completions activity, the company's well intervention and integrity, production optimization, and digital solutions businesses should remain resilient. With a more uncertain backdrop, We remain focused on maintaining costs and capital discipline and otherwise controlling what we can control. We will continue to execute our strategy and offer differentiated services and solutions to our customers. We will also size the business based on revenue realities, and we will adjust CapEx spend on the projects that customers sanction and the business that is awarded to ExPro. In addition, our zero net debt balance sheet also provides a company with strategic and financial flexibility. Operational performance has been strong, and we have a head start on cost optimization with our Drive 25 efficiency campaign that we launched several quarters ago. This should help us protect margins if activity softens and allow us to improve margins if activity stabilizes or improves. Again, on a relative basis, we are less exposed to the markets most likely to contract in 2025, including the lower 48, Mexico, and offshore Saudi. Regarding our ability to offer differentiated services and solutions, We continue to provide cost-effective technology to the markets as evidenced by several of the contract awards that we highlighted in our press release. In the Gulf of America, we've remained a market leader in well construction by investing in technologies that enable operating efficiencies and cost savings, improve safety outcomes by removing personnel from the red zone, and enhance well integrity through more reliable tubular connections, most recently securing a three-year tubular running services contract over four rigs. The contract for approximately $50 million integrates our most advanced digital technology, including Centrify and iCAM. PRT Offshore, which we acquired in 2023, continues to perform well, highlighting how Expro has opportunistically used M&A to complement organic investments in the business. In the first quarter, the PRT team simultaneously executed operations for seven subsea customers in the Gulf of America. The team is also leveraging EXPRO's global operating footprint to improve asset utilization and increase revenue, having secured new awards for surface handling equipment in Asia Pacific and Sub-Saharan Africa. In ESA, we successfully completed the system integration of our open water intervention riser system, the first of its kind to be built by EXPRO. The equipment was delivered under a six-year contract and is currently mobilized for the deployment in the UK sector of the North Sea. The current campaign is abandonment, but EXPRO's open water IRS solution ensures safe and reliable subsea well access and can be used across development, intervention, and abandonment, ultimately unlocking production gains while minimizing operational costs. In the Eastern Mediterranean, we continue to see robust momentum and have successfully completed deepwater well construction operations for two major clients for TRS services across two exploration wells. Within the MENA region, our QPulse technology was successfully piloted in the Jafura field in Saudi, demonstrating excellent correlation in multi-phase flow data across three phases compared to the traditional test separator. The success allows the technology to be used for production testing as a standalone technology, eliminating the need for a conventional separator. This non-intrusive solution offers rapid, cost-efficient data essential for field production allocation and well-performance monitoring. In Asia Pacific, we successfully deployed our Centrify consolidated control console for a major international oil company in Indonesia, marking its maiden international deployment. We are seeing an increased demand for the market for our Centrify systems, reflecting the value and efficiency they bring to our clients' operations. This system exemplifies our commitment to automation and operational excellence. Also in Indonesia, we secured a three-year contract for well intervention services across 315 wells. Before I hand over to Quinn, I'll comment on the guidance for the second quarter and full year 2025 that was included in our earnings press release. For Q2, assuming no additional tariff-driven uncertainty and that commodity prices were made at or near current levels, we expect a seasonal rebound in Europe and a return to normal operations cadence in Asia Pacific after an extended monsoon season. with low to mid single-digit sequential revenue growth overall and modest quarter-over-quarter adjusted EBITDA margin expansion. Q2 revenue will be down on a year-over-year basis due to a non-repeat of sub-C projects delivered in the second quarter of 2024. We currently expect at least mid single-digit revenue growth in the second half of the year compared to the first half of the year, largely supported by the scheduled startup of new projects. For full year 2025, With the same tariff and commodity price caveats, we expect revenue to be generally flat relative to 2024 and that margins will be stable, if not up modestly, year over year due to activity mix and operating efficiency gains. For now, we remain comfortable that full-year revenue will exceed $1.7 billion. We also expect adjusted EBITDA for the full year will meet or exceed 2024 results. But clearly, visibility is less precise today given the uncertain macroeconomic and geopolitical backdrop. While there is currently a lot of uncertainty in the market, we have experienced extended down cycles as well as transient troughs and activity in the past. The current market feels more like a transient trough to me, and in retrospect, 2025 will be a better year than many investors currently assume, but only time will tell. Our business is more leveraged to long cycle rather than short cycle development, so we should be somewhat insulated from short-term movements and commodity prices. Nonetheless, we will quickly adjust our costs and capital expenditures as market conditions warrant. We are also in a good position with the balance sheet that we have, the quality of the customers that we support, and the geomarkets to which we are more exposed. Importantly, we are focusing on profitability and cash generation more than growth. With that, I'll hand the call over to Quinn to further discuss our financial results.